THE WANDERING TAX PRO
Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 40-year veteran tax professional Robert D Flach.

Tuesday, September 29, 2015

House Speaker John Boehner is resigning his
Ohio House seat, and thus the U.S. House leadership post, at the end of
October.No great loss.It is, however, very, very important that
whoever replaces him as Speaker is NOT a member or supporter of or panderer to
the Tea Party!

“In 2013, more than
200,000 people on net fled states with Democrat governors for ones run by
Republicans, according to an analysis of newly released IRS data by Americans for Tax Reform.

'People move
away from high tax states to low tax states. Every tax refugee is sending a
powerful message to politicians," said ATR President Grover Norquist. "They
are voting with their feet. Leaders in Texas and Florida are listening. New
York and California are not.’"

* Years ago, when I was working in affluent
suburban Summit NJ, I saw a pillow in a home that was embroidered with the
statement “You Can Never Be Too Rich or Too Thin”.

A client recently asked Sterling Raskie of
GETTING YOUR FINANCIAL DUCKS IN A ROW “Am I Saving Too Much?”Perhaps the pillow should have included “And
You Can Never Save Too Much”.

I often put clients in shock when I tell
them what they owe – mostly because of large capital gains.And they are sometimes subject to penalties
because of underpayment of estimated tax or, because the final corrected
brokerage statement frequently arrives late in the season, late payment of tax
due to GD extensions.

Monday, September 28, 2015

I have often blogged about my obligations
as a tax preparer.But what about the
client?A 1040 client also has
obligations, responsibilities and requirements regarding their return.

In the letter that I give to clients with
their finished returns I state –

“There
returns are subject to review and examination by the IRS and appropriate state
tax agencies. We accept responsibility for the clerical and mathematical
accuracy of all returns I have prepared. However, the
burden of proving the facts reported on your tax return rests with you.
You are responsible for keeping all of the necessary documentation of the
income and deductions claimed on these returns for at least three
(3) years.”

This letter also says -

“Please
examine these returns carefully to be sure all items of income and deductions
have been accounted for properly. You
are responsible for all the information reported on the returns.
If you find anything that is not in order, or that you do not understand, contact
us immediately. It
is extremely important that you verify the accuracy of all Social Security
numbers on the returns before mailing.

As the NATP Standards of Professional Conduct says –

“The client is responsible for any decisions
made when the tax return is prepared. When the client signs the tax return, it
has the force of an affidavit.

A client should not take the finished returns from his/her tax professional and
just sign and mail without actually looking at them. The client should
carefully review all the forms and schedules that make up the returns before
signing the return, and ask the preparer if there is something that he/she does
not understand.

And, as I continue to point out, just
because a client does not understand something on a tax return does not mean that there is an
error.Never, never, never preface a question posed to your tax preparer,
or a reference to a notice from the IRS or state agency, with the statement, “You
made an error on my return”!

A
client also has obligations to his/her tax preparer.The client has the obligation to provide to
the preparer all the information
necessary to properly prepare a complete and accurate tax return, to be honest
with his/her preparer, and to provide any documentation of the information
provided if requested.

My 1040 engagement letter includes a
section of “Taxpayer Responsibilities”, which includes –

“ •You
agree to provide us all income and deductible expense information. If you
receive additional information after we begin working on your return, you will
contact us immediately to ensure your completed tax returns contain all
relevant information.

•You
affirm that all expenses or other deduction amounts are accurate and that you
have all required supporting written records.”

Friday, September 25, 2015

* Year-end tax planning time is almost upon
us.If you are looking for a tax
professional to help with your planning you can begin your search at “Find A Tax Professional” – check out the advice and information section before
starting the search.

While the 2015 filing season was certainly
not “miserable” for me – no worse than any other – I did hear from more clients
whose federal refunds were delayed, for the weirdest reasons (see my post “You Can’t Make This Stuff Up”), than any other filing season in my 40+ years in the
business.With continued budget cuts I
expect the 2016 season will also have many delayed refunds.

“WalletHub
analyzed and ranked the 50 states based on the fairness of their state and
local tax systems — including income taxes, sales and excise taxes, and
property taxes. To rank the states, Wallethub used the results of a nationally
representative online survey of 1,050 individuals to assess what Americans
think a fair state and local tax system looks like. Our analysts then compared
public perception to data on the real structure of tax systems in all 50 states.”

According to WalletHub Montana is the most
fair and Washington state is the lease fair.I was truly surprised that New Jersey was the 18th “most
fair” state.I expected it to be much
lower on the list.My current home state
of Pennsylvania is #35.

Methinks somehow a more progressive tax
system is considered to be more fair.To
me, a flatter tax system would be fairer.

Delaware is the most tax-friendly state and
California is the least tax-friendly.New Jersey is the 3rd least friendly – now that is more what
I expected to see.PA is on neither the
ten best nor ten worst lists.

“President
Obama declared the Kentucky counties of Leslie, Breathitt, Fleming and Perry
federal disaster areas following earlier similar declarations for Carter,
Johnson, Rowan and Trimble Counties. The declaration permits the IRS to
postpone certain deadlines for taxpayers who reside or have a business in the
disaster area.”

Thursday, September 24, 2015

Good advice from Duke Ellington –
especially for my 1040 clients when it comes to notices from the IRS or a state
tax authority.

If you receive a balance due notice from
the IRS or a state tax agency DO NOT
AUTOMATICALLY PAY THE AMOUNT REQUESTED!

In my 40+ years of preparing tax returns I
have found that more often than not
(actually in my experience it is more like 75% of the time) a balance due notice from “Sam” or your
state is wrong.And, again in my
experience, notices from a state tax agency (at least when it comes to NJ and
NY) are wrong more than ones from the IRS.

If you receive a balance due notice from
any tax agency immediately mail,
email, or give it to the tax professional who prepared the return, or your
current tax professional if you have changed preparers since filing the return
in question.If you “self-prepared” the
return, perhaps relying on a “box”, seek out a tax professional for advice. You can start your search at FIND A TAX PROFESIONAL.

And DO
NOTHING TILL YOU HEAR FROM YOUR TAX PRO.

Even if the notice is correct, if it
includes a penalty assessment for late payment, late filing, or underpayment of
estimated taxes your tax professional may be able to get the penalty completely
or partially abated using the federal First Time Abatement program, reasonable
cause, or annualizing your income for estimated tax purposes.

And – very, very, very important – when sending
the notice to your tax professional DO
NOT SAY TO HIM OR HER, “HEY, YOU MADE A MISTAKE ON MY RETURN.”!

Wednesday, September 23, 2015

Once
again the idiots in Congress have put off dealing with the now infamous “tax
extenders”.And once again these idiots
will probably extend the entire lot for at least one more year at year-end.

But
should all of these tax benefits be extended, or, much “more better”, be made
permanent?I don’t think so.Rather than automatically extending them all
for a year, the idiots in Congress should review each one individually and determine
its “appropriateness” – and make permanent those that they determine to be
appropriate.Of course because , being idiots, they wait
until the very last minute each year they do not have the time to do anything
but temporarily extend them all.

Here
is a look at the more popular of the “tax extenders” that affect 1040 filers,
with my “thumbs up” or “thumbs down” vote -

EDUCATOR
EXPENSES - NO

This
$38 - $70 gift from Uncle Sam is a nice nod to teachers, paying for a dinner
out.But why do teachers
deserve this more than police officers or firefighters or nurses or other
public service employees?I see no real
reason why this should be continually extended, or made permanent.

DEDUCTION
FOR TUITION AND FEES - YES

While
the American Opportunity Credit generally provides the best tax benefit for college
expenses, and is available to more taxpayers due to the higher income
threshold, it is not available for graduate students.This deduction is available to graduate
students, and undergraduate students who have already claimed the AOC for the
maximum 4 tax yearsIt is often “more
better” than claiming the Lifetime Learning Credit, and is available to more
taxpayers due to its higher income threshold.For those reasons it deserves to be extended or made permanent.However, that being said, I firmly believe the
Tax Code should not be used for distributing government benefits.All education tax benefits should be removed
from the Tax Code.These benefits should
be delivered through the existing programs for student financial aid of the
Department of Education.

OPTION
TO DEDUCT STATE AND LOCAL SALES TAX - YES

This
provides a tax deduction for residents of states that do not have a state
income tax, and I have found that it often provides a better tax deduction for
retired seniors.It should be extended
or made permanent.

DEDUCTION
FOR MORTGAGE INSURANCE PREMIUMS – DEFINITELY NO

I
have absolutely no idea why this deduction was created – other than the
aggressive lobbying of the mortgage insurance industry.Mortgage insurance is life insurance, and
life insurance premiums are not a deductible expense, other than as an employee
benefit provided by employers.I believe
that potential homeowners should be encouraged to put more money down when
purchasing a home – and avoid the need for mortgage insurance.It certainly does not deserve to be extended
or made permanent.

DIRECT
TAX-FREE TRANSFER FROM AN IRA TO A CHARITY – DEFINITELY YES

This
allows retired taxpayers over age 70½ who do not need to take all or any of the
required minimum distribution (RMD) from their IRA for cash flow purposes, but
are statutorily required to do so, to avoid increasing their Adjusted Gross
Income by using the RMD to make a charitable contribution. By reducing AGI this tax benefit could also
reduce the amount of Social Security or Railroad Retirement benefits that are
taxed.This is the most “appropriate”
tax benefit of the lot and truly deserves to be extended or made permanent. {NOTE- One of the very serious problems with the custom of waiting until the very last minute to extend the extenders is that by the time the law is enacted it is too late to take advantage of this tax benefit.}

Tuesday, September 22, 2015

These posts will discuss errors made by
other tax return preparers that Jason has discovered, presumably when he
reviews the prior years’ returns of a new client.The first installment reports on a serious
error concerning the deduction for a home office.

I asked Jason - was the preparer who made
the mistake was a CPA?Here is his
response (highlight is mine) –

“The
answer to your question in the comments section is yes!

As with you, almost all of the f-ups I see
are from CPAs, or H&R Block.”

“State
Sen. Tom Kean Jr. (R) is proposing a bill (S 2721) that would grant income tax
exemptions to some entertainers performing in Atlantic City and other New
Jersey cities.Now, Atlantic City
has hit hard times. Several casinos have closed, and tourism is down. This is
partly due to the proliferation of gambling all along the Eastern Seaboard. But
Kean’s idea represents all that is wrong with the way we approach taxes in
America.

Kean
wants to exempt A-list performers from income tax. The idea is that these
A-listers will be motivated to perform in Atlantic City. They will come and
sing and dance more often. And people will flock to the Jersey Shore once more.”

David is correct when he observes -

“It
is troubling that politicians look to the tax laws as a panacea for whatever
ails society. And the resulting policies are never sound.”

“Unlike
a credit card, a debit card is essentially a direct line to your bank account,
so you may need to be more careful when using it to make purchases. Money is
deducted directly from your bank or credit union account when you use your
debit card.”

I have been talking about, and warning
clients and readers about, the differences between debit and credit cards for
many years, most recently in “Debit Card Vs Credit Card” at my former BOB’S
BABBLINGS blog, where I ask the question, “When
should you use your debit card to make an online purchase?”.The answer – NEVER.

THE LAST WORD –

Is a puzzlement.

I do not understand why Republican candidates
feel they have to pander to the religious right when it comes to issues like
abortion and same-sex marriage to be considered true conservatives.

Am I wrong in believing that one of the
basic tenants of conservative philosophy is a minimal intrusion by government
in the personal and business lives of citizens?

The religious right wants the government to
tell citizens how to live their lives by forcing the specific religious beliefs
of fundamentalist Christianity on them.

Someone please explain.

The following observation is on display at
“The Starving Artist” eatery in Ocean Grove –

“The
last time we mixed politics with religion people got burned at the stake!”

Monday, September 21, 2015

As a professional “commercial” tax
return preparer, regardless of where I live or practice, if I want to be able
to prepare New York state income tax returns for compensation, and I am not a
CPA, attorney, or Enrolled Agent (EA), I must register with the state of New
York, pay a $100 fee, and receive a “New York Tax Preparer Registration
Identification Number”, much like I had to register with the IRS, pay a fee,
and receive a Preparer Tax Identification Number (PTIN).The $100 fee to NY State is due each year to
renew my authority to prepare NY returns, just as the IRS charges an annual fee
to renew my PTIN.

Before 2015 there was no CPE or
testing requirement for registration.You just had to pay the annual $100 fee.I recovered this expense by charging each of the 20 or so clients for
whom I prepared a NY resident or non-resident individual income tax return
(IT-201 or IT-203) $5.00, which I separately identified on my invoice as “NY
State Tax Preparer Extortion Fee Surcharge”.

But now, in order to renew my
authority to prepare 2015 NY State returns, I not only have to pay $100, but I
also must complete a special 4-hour program of continuing education.I qualify for the limited 4-hour program
because I have prepared ten or more New York State personal income tax returns
during the years 2011, 2012, and 2013.All other preparers must complete a 16-hour program.

While it is obvious why Enrolled
Agents are exempt from the required CPE, there is no reason why CPAs and
attorneys who want to prepare NY State tax returns should also be exempt.If New York is sincerely concerned about
assuring the competence and currency of tax preparers they should expand the
CPE, and eventual testing, requirements to CPAs and attorneys.A recent post from Jason Dinesen that I will
reference in tomorrow’s BUZZ installment highlights the fact that CPAs make at
least as many errors on tax returns as “unenrolled” preparers.CPAs and attorneys were only exempt from the $100
annual extortion fee because the state already got a registration fee out of
them.

The State of New York is the only
authorized provider of the 4-hour requirement, and the 16-hour one for new
preparers.And they are currently only
offered online.I tried for a long time
to register online for the 4-hour program, but without any success.

When I was finally able to gain access
to the registration for the webinars the process was easy.This was actually my first experience with
online webinars.Looked at objectively
the presentations and content were more than satisfactory.But looking at them in terms of substantive
continuing education value is another thing altogether.

While I had originally preferred to
attend an actual live seminar, as it turned out, considering the content and
methodology, I was much happier satisfying the requirement online.I have no problem whatsoever taking 4 hours
of NY State CPE via free online webinars of this kind each year, as long as
they provide 3 1/3 hours of substantive continuing education value (a CPE hour
is traditionally 50 minutes of actual content).

I “took”
the sessions in two separate “sittings” of approximately 2 hours each.I was indeed pleased that it could be done in
parts at my leisure.

There are a series of multiple
choice review questions asked after each session.However this is not a “test”, but a review of
the material covered.The answer is only
recorded once you get it correct.If
your first choice is wrong you are told so and can continue until you get it
right before proceeding.I was very
pleased with this process and found that it is actually better for
comprehension of the material.

And after each presentation one can
print out a Certificate of Completion.Before printing you are asked for your full name and “OLS User ID”,
which is printed on the certificate.I
had absolutely no idea what my “OLS User ID” was – so I entered my New York Tax
Preparer Registration Identification Number.It did not reject the number, so I guess it was ok.

To be perfectly honest all of the
four-hours of sessions were a total waste of my time.They were either redundant or unnecessary or
covered the wrong year.Thankfully there
was no charge or related out-of-pocket expense (such as travel) involved (other
than the annual $100 registration fee).

The overview was basically an
explanation of the NY State tax preparer registration program.Of no substantive value as continuing
education.

The federal update component is redundant
and a true waste of time for me, and for any serious and responsible tax
preparer who is already taking federal update CPE elsewhere.The federal update class I sat through is
actually a total waste of time for all
preparers – as it concerned changes, mostly the inflation adjusted numbers,
for tax year 2014 and NOT 2015.I could have been watching an episode of
“Hart to Hart” on the “Hallmark Movies and Mysteries” cable channel instead!

The New York State update webinar
was obviously the only one with any potential continuing education value for
me.Unfortunately it, too, was an update
for tax year 2014 and NOT 2015.Another total waste of my time.I will have to wait until January 2016 to
learn what’s new for NY State for 2015 from Kathryn Keane at the NJ-NATP
annual “Famous State Tax Seminar”.I did
actually learn a few new things – but they were general information items and
nothing that would actually affect any of my existing NY State filers (I do not
accept any new clients – so I really don’t need to know this new stuff and it
was of no real value to me). The
presentation also covered some corporate, estate, and trust items, which is
fine but of no value to me (I do not prepare NY State corporation, estate, or
trust returns).

A common error component is not a
bad idea, but the errors discussed were basic and mostly of a procedural nature.The session did not cover detailed specific
tax law errors.While of no real
substantive value as continuing education for me, it was an adequate basic
review.

The Standards of Conduct and
Penalties section was the ethics class.As
noted above, this was the longest of the 5 presentations.It was a total waste of time – with no
substantive continuing education value for me.How many times do I have to say this – forcing a crooked (or ethically-challenged) tax preparer to sit through
annual redundant ethics preaching ain’t going to turn him/her honest!This session repeated much of the discussion
from the overview component, and there were also redundancies within the presentation.Unfortunately I already have to sit through
at least 2 hours of federal redundant ethics preaching each year (not because I
am required to, but because most providers of day-long federal CPE update
presentations feel they have to include ethics preaching) – this just added to
the number of hours lost to me that I will never get back again.

It seems obvious to me that
preparers who are required to take the 4-hour program should be allowed to use
CPE from other qualified providers to satisfy the update (at least federal) and
ethics components.I take a the NATP
8-hour year-end Essential 1040 federal tax update each year, and attend the
NJ-NATP “Famous State Tax Seminar” each January, which usually includes at
least 1 CPE of NY state tax updates.And, of course, as mentioned above, just about every CPE offering
includes redundant ethics preaching.My
attendance at these offerings should be able to satisfy most of the 4-hour
requirements so I do not have to waste my time sitting through the state’s
redundant online sessions.While there
is no charge to take the NYS sessions online – my time is worth money!

So, having totally wasted 3+ hours
of my valuable time, now all I have to do is send my $100 to New York in
December.Along with my annual PTIN
renewal fee this is the business expense that I hate paying the most.

At some point in the next 3 years it
appears that I must pass a NY State “competency” test.As with the now dead IRS RTRP regulation
regime, I feel that, as a veteran preparer of NY State returns, I should
receive a “grandfather” exemption from this test.But that is not going to happen.I am, however, glad that I will be able to
take the test free of charge (?) online on my home office computer.

I would be interested in hearing the
thoughts of my fellow tax professionals on this subject.

And I would hope New York tax
professionals with the proper contacts will pass this post on to their
colleagues and appropriate members of the NY Department of Taxation and
Finance.

“I’ve
been asked by members of the NAEA why I’m against preparer regulation. All it
does is increase a bureaucracy, decrease consumer choice, increase prices to
the general public, and uses limited IRS resources instead of where they could
be better used. I don’t mind competition, and the IRS currently has means of
going after bad preparers.”

Right on, Brother Russ!

* BTW – the latest news, and it is good, on
the attempt to regulate all tax return preparers is a “tweet” this Wednesday
from @GOPSenFinance - “Markup of
Bipartisan Bill to Prevent Identity Theft & Tax Refund Fraud {and
Regulate Tax Preparers – rdf} is
Postponed Until Further Notice”.The
reason for the postponement is the result of well-founded concerns about giving
the IRS too much power to regulate tax preparers.

* Preparer Regulation – a definite NO!But there is a need for a voluntary
industry-based tax professional designation/credential to acknowledge and
identify competent and current tax preparers.

* Did you know I am on Twitter?I am just short of 1000 followers
and looking to reach that goal by end of September.Why not follow me - @rdftaxpro.

THE LAST WORD –

What a buffoon!

I had planned to spend 3 hours on Wednesday
night watching the second Republican debate on CNN. But after 15 minutes I could watch no more,
and I changed to the Disney channel.

It started out fine with the candidates
introducing themselves, but soon it was clear that dealing with the comic
relief would replace any serious discussion of issues.

Tronald Dump proved that everything Bobby
Jindal, and others, have said about him is true.

While some candidates showed cowardice by
avoiding the question of the Dumpster’s temperament and Presidential access to
our nuclear arsenal, my sentiments certainly mirror those of Goldman Sachs CEO
Lloyd Blankfein, who said, “It’s hard to imagine his finger on the button. That blows my mind.”

God forbid Trump is elected President and
Putin criticizes him.There goes Russia!

It was good to hear Paul Rand correctly observe
that Trump had the maturity of a junior high school student (he was kind – more
like a 5th grader).Trump’s
reply proved Rand’s point – “I never
attacked him on looks, and believe me, there is plenty of subject matter there.
That, I can tell you.”Isn’t that
basically saying, “you’re ugly”?

The state of the union is truly troubling
with Trump as the Republican front-runner.

Thursday, September 17, 2015

I have finished most of the work on my 2015
YEAR END TAX PLANNING GUIDE – I am just waiting for the IRS to announce the
inflation adjusted information for tax year 2016.This report should be ready to “go to press”
by the end of October.

During the last two months of the year you
can do a lot to make sure you pay the absolute least amount of federal and state
income tax for 2015 and 2016.My guide
discusses year-end tax planning strategies and includes a 2015 Preliminary
Return worksheet, a 2015 Alternative Minimum Tax worksheet, and the tax
information for 2015 needed to prepare your preliminary return as well as the
information for tax year 2016.

The cost of this special report is $3.00
for a pdf email attachment and $4.50 for a print copy.However I am making a special
“pre-publication” offer to readers of TWTP.If your order is postmarked
before October 15th you will receive a 25% discount – so the pdf
version is $2.25 and the print version is $3.35.

Wednesday, September 16, 2015

One
of the sessions at the recent National Association of Tax Professionals’ Tax
Forum and Expo that I attended reminded me that the potential “shared
responsibility” penalty has been doubled for 2015 – going from 1% of annual
household income to 2% of annual household income.This brings up an issue I have with the
“self-assessment” of this penalty.

The
facts and circumstances associated with a tax return might indicate that the
taxpayer(s) may be subject to a penalty for underpayment of estimated
taxes.But as a tax preparer I will not, nor am I required to,
calculate the penalty and include it in the filing of the return.If the IRS wants to assess my client(s) a
penalty for underpayment of estimated tax they are welcome to do so.If they do I will attempt to reduce the
penalty assessment via one of the exceptions available on Form 2210.

Preparing
a Form 2210 “upfront” involves additional work and an additional fee.Why should a taxpayer pay me a fee to assess
a tax penalty?If a penalty is assessed
by the IRS, which it may not be, then it is appropriate for me to charge the
client(s) a fee to reduce or eliminate the penalty assessment.

Would
the same logic not also apply to the shared responsibility penalty?If the IRS wants to assess a taxpayer a
penalty for not having full-year minimum essential health insurance coverage
then they are welcome to do so, at which point I will attempt to reduce the
penalty assessment using one of the exceptions for a fee.But, as with underpayment of estimated taxes,
why should the taxpayer(s) have to pay me a fee to be assessed a penalty?

To
be honest, I do calculate any penalty for premature withdrawal from a pension
account on Form 5329 as part of the filing of a client’s return, but I believe
this is somewhat different.The penalty
assessment is automatic and straight forward and is simple to calculate.

So
fellow tax professionals, what do you have to say about my issue with the shared
responsibility penalty?

Tuesday, September 15, 2015

“Light travels faster than sound.This is why some people appear bright until
you hear them speak.”

I enjoyed a matinee performance of Jason
Robert Brown’s THE LAST FIVE YEARS on Sunday at the Shadowland Theatre, an
intimate equity venue in Ellenville NY.It tells the story, in song only, of the 5-year relationship of novelist
Jamie and actress Cathy.Jamie tells the
story chronologically and Cathy tells it from end to beginning.There are two week-ends left to catch this
show.Two thumbs up!

* Just a reminder – today (September 15th)
is the day to mail out your 3rd Quarter federal and state estimated
tax payments.

“The
undersigned organizations, representing millions of individuals, employees,
businesses of all sizes, community development organizations and non-profit organizations,
urge Congress to act immediately on a seamless, multiyear or permanent
extension of the expired and expiring tax provisions, including appropriate
enhancements. These tax provisions are critically important to U.S. jobs and
the broader economy.

Failure
to extend these provisions is a tax increase. It will inject instability and
uncertainty into the economy and weaken confidence in the employment
marketplace. Acting promptly on this matter will provide important
predictability necessary for economic growth.

The
expired provisions should be renewed as soon as possible this year. We urge all
members of Congress to work together to extend seamlessly on a multiyear basis,
and where possible enhance or make permanent, these important tax provisions.”

As the letter states, the idiots in
Congress need to shit or get off the pot.Waiting until the very last minute causes problems for the IRS, tax
preparers, and taxpayers.

It is especially important that if the
ability to make a direct transfer from an IRA to a charity as satisfaction of
an RMD be passed ASAP so taxpayers can actually take advantage of this benefit.

I do not watch tv court shows.Let’s face it, the cases on these programs
are not chosen because they highlight an interesting or important point of
law.These shows are part of the
disturbing trend in tv programing in which the main purpose is to humiliate
stupid people who abandon all self-respect for their 15 minutes of fame (a good
description of anyone who voluntarily participates in so-called “reality tv”).The “adversaries” on these tv court shows are
usually idiots – and their idiocy is further proven by their decision to appear
on these shows.To be honest, I am
surprised that Prof Maule watches them.

Anyway, that said, here is the issue
covered in the “trial” (highlight is mine) – the tax preparer claims the client
“had asked him not to report the lump-sum payment on the state income tax return”.

The
taxpayer does not determine if a distribution is taxable and should be reported
on the federal or state tax returns – federal and state tax law does!The tax preparer is a fool.If the amount was indeed taxable, and I am
not going to say whether it was or not as I do not know all the facts and
circumstances, the tax preparer is obligated to include it on the return.If the taxpayer/client did not want to report
it, and it was indeed taxable, she
should have been told to go elsewhere.

And when the taxpayer received the
underpayment notice from the state she should have contacted the tax preparer
immediately, before making any payment to the state.

In his bottom line Professor Maule tells us
“there are so many lessons to be learned
from this episode”, and goes on to list them.

* Yesterday (Monday) Joe Kristan’s week-day
daily Tax Roundup at THE ROTH AND COMPANY TAX UPDATE BLOG discussed as his
opening topic new pending legislation aimed at combatting identity fraud and
tax refund fraud that includes a provision that gives “the Treasury Department and the IRS with the authority to regulate all
aspects of Federal tax practice, including paid tax return preparers, and overrides
the court decisions” in Loving vs IRS.

“It’s
my feeling that the bad guys are the bad guys: forcing you to take ethics courses doesn’t change that. Incompetent
and lazy preparers are incompetent and lazy: forcing someone to sit through continuing education courses (likely
while text messaging, trust me, I’ve been a speaker at these things) doesn’t
make that person smarter or more conscientious. The reality is that smart, competent tax professionals do the
right things already. But that doesn’t make for good press. So, instead, we
add more layers.”

Even if this law passes, and I do not think
it will, it will not affect the 2016 filing season (for filing 2015 tax
returns).As with the previous failed
RTRP program it will take several years to phase-in.

THE LAST WORD –

Finally a Presidential candidate who has
the courage to call a spade a shovel.

He perfectly described Trump as “an unserious and unstable narcissist” and a “circus act”.

Jindal also accurately stated -

“Like all narcissists, Donald Trump is insecure and weak, and afraid of being exposed. And that’s why he is constantly telling us how big and how rich and how great he is, and how insignificant everyone else is.We’ve all met people like Trump, and we know that only a very weak and small person needs to constantly tell us how strong and powerful he is. Donald Trump believes that he is the answer to every question.”

And –

Trump “is shallow. Has no understanding of policy. He’s full of bluster but has no substance. He lacks the intellectual curiosity to even learn.”

SADLY I PARTICIPATED- BUT STILL ENDED UP WITH A TRUE INFERIOR IN THE WHITE HOUSE

DONALD T RUMP HAS NOT DONE A SINGLE THING THAT IS "APPROPRIATE" OR "ACCEPTABLE" FOR A CANDIDATE OR A PRESIDENT SINCE THROWING HIS HAT INTO THE RING.EVERY SINGLE DAY TRUMP PROVIDES MORE PROOF THAT HE IS AN IGNORANT, SELF-ABSORBED, UNFIT, MENTALLY UNSTABLE IDIOT, AND A DEPLORABLE AND DESPICABLE HUMAN BEING.TRUMP MUST BE REMOVED FROM OFFICE FOR MENTAL INCOMPETENCE ASAP!

Donald T Rump has not done a single thing that anyone with intelligence would consider “appropriate” or “acceptable” for a President since deciding to run for office.

Every single day Trump provides more proof that he is an ignorant, self-absorbed, unfit, mentally unstable idiot, and a deplorable and despicable human being, who must be removed from office ASAP.

VERY IMPORTANT -

(1) Before contacting me with questions about how a blog post relates to your specific situation, please be aware that I do not give free tax advice to non-clients by e-mail, comment response, or phone. So don't waste your time and mine.

(2) I am winding down my tax practice, and I will not, under any circumstances, accept any new clients. Period. I am actually trying to "thin the herd".